Services To Make A Statement?
Some of the moves lower in the big services names have been breathtaking. HAL is now 52% off most recent 52 week highs, without the courtesy of a 2:1 split (stab at humor), and that is WITH the 7% gain this week headed into Friday. Peer SLB is acting slightly better as it trades 45% off its most recent peak, and technically looks better, after a doji candle on 5/31 within a bullish morning star pattern, that also happened to be a double bottom near 34/35 from last December. The ratio chart below shows a bit of momentum for the services plays, although it is somewhat early. Time will tell whether this is a dead cat bounce, or the start of something more. I would bet the former, as the long downtrend seems cemented, and would need a lot of work to reverse it.
Wednesday we discussed the divergence within the highly concentrated and very diversified retail ETFs, and it is even more pronounced in the energy arena. Below is the ratio chart of the XLE compared to the XOP. The former currently trades 19% off most recent 52 week highs, while the latter is a staggering 41% off its own most recent peak. The top 3 components in the XLE make up one half of the fund, and the composition in the XOP is drastically different as the top 3 largest holdings make up just 9% of the fund. Look for this relationship to continue higher for the XLE.
Round number theory is something I try and stress everyday, because both support and resistance could be meaningful there, especially it if happened before. Below is a good example of that with the chart of DK, and how it appeared in our 6/4 Energy Report. This stock recorded a bullish engulfing candle at the 30 figure on 6/3, and has been off to the races since then, advanced 12 of the last 14 sessions. Keep in mind the 30 number was supportive last December and this January. Full disclosure, I recommended a sale near 35, and it has traveled well beyond that, but the 40 number has been ample resistance dating back to last November-December, and this April.